It allows gas companies to add a separate charge of up to 5 percent to speed replacement of 12,300 miles of antiquated cast iron and steel pipes.

February 07, 2012|By Scott Kraus and John L. Micek, Of The Morning Call

HARRISBURG -- Legislation allowing gas companies to add a separate infrastructure replacement fee of up to 5 percent to customers' bills to speed the replacement of 12,300 miles of antiquated cast iron and bare steel distribution lines is headed to Gov. Tom Corbett's desk.

The bill requires gas utilities to file long-term infrastructure improvement plans in order to qualify and stiffens penalties for some pipeline safety violations from $10,000 to $200,000 a day, and increases the maximum penalty per incident from $500,000 to $2 million.

The proposal's prospects were aided by public outrage that followed deadly gas explosions in Allentown and Philadelphia and was sponsored by said Rep Robert Godshall, a Montgomery-county Republican. It passed the Senate in January, with some changes designed to prevent gas companies from taking advantage of the new fee to pad their bottom lines.

The House voted 194-0 to concur with the changes Tuesday night, with backers calling it an economic development measure aimed at creating new jobs.

"This is an important tool for utilities," House Republican Whip Stan Saylor of York said. "We're an old state and so much of our infrastructure is decaying … It creates jobs for Pennsylvania, which is so important right now."

In a recent interview, Godshall said the tragedies in Allentown and Philadelphia helped push the legislation forward.

"I would say unquestionably, there is no question the answer to that is yes," Godshall said. "It's unfortunate the damage it did and the people involved. It was a push that this has gotten to be taken care of."

The legislation is expected to give gas utilities a way to fund distribution line replacement as they go, rather than replacing the pipes and then asking the PUC to approve a rate increase—a process that is called filing a rate case—to recover the cost later.

UGI Gas, which serves the Lehigh Valley area, wouldn't immediately qualify. The Senate amendments included a provision that requires gas utilities to file a rate case within five years of applying for a infrastructure replacement fee. UGI hasn't filed a rate case since 1995.

The company has not said whether it would take advantage of the legislation if it passed.

The Senate's changes mollified opponents of the legislation, including Pennsylvania Consumer Advocate Sonny Popowski, who said the previous version of the bill would have made it too easy for gas companies to raise customers' rates without forcing them to use the money to ramp-up replacement.